A significant new player is now entering the mix of the growing number of organizations providing institutional investors with ESG rankings and data. At G&A Institute, we've been tracking the growth of these organizations (such as MSCI, Sustainalytics, RobecoSAM, Bloomberg, Thomson Reuters, and others) and work with our clients to help managements understand, optimize and utilize these important intelligence points coming from the rapidly-growing number of investors considering ESG.
Founded in 1985 as Institutional Shareholder Services Inc., ISS is the world’s leading provider of corporate governance and responsible investment solutions for asset owners, asset managers, hedge funds, and asset service providers. Institutional investors today rely on ISS' expertise to help them make informed corporate governance decisions, integrate responsible investing policies and practices into their strategy, and execute upon these policies through end-to-end voting.
Among the issues monitored, analyzed and perspectives and opinions offred to the investors by ISS: board room makeup; qualifications of individual board candidates standing for election; CEO compensation; separation of the posts of chair of the board and chief executive officer; proposed transactions such as merger or acquisition; shareholder rights; transparency and disclosure of board and C-suite activities; “over-boarding by directors”…and more.
Over the decades ISS has been a powerful and very visible force in annual corporate proxy voting issues, offering advice to the client base to help the institutions exercise their fiduciary duties, including the mechanics of the voting process during the annual electoral season.
Consider the influence of ISS in the capital markets: 117 global markets covered; 40,000 corporate meetings reviewed; on behalf of 1,700 global institutional investor clients.
Now, “E” and “S” along with “G” issues are coming into sharp focus for ISS – due to the demand of its institutional clients - and included in the QualityScore process.
Tune in now to an important development that significantly expands the influence of ISS and communicates new dimensions of “G” (governance) into the ESG space (E=environmental, S=social, societal issues). The E and S QualityScore builds on ISS’s market-leading Governance QualityScore, which provides a measure of governance risk, performance, disclosure and transparency in Board Structure, Compensation, Shareholder Right, and Audit & Risk Oversight.
The E&S QualityScore, says ISS, provides a measure of corporate disclosure practices and transparency to shareholders and stakeholders. This is the Disclosure and Transparency Signal that investor-clients seek, and is a resource that enables effective comparison with company peers.
ISS had been an independent organization, then was acquired by MSCI, and later divested, becoming a unit of the P/E firm Vestar Capital; it was purchased by Genstar Capital in October 2017. To rebuild the firm’s ESG capabilities lost as a result of the 2014 spinoff from MSCI, ISS in September 2015 acquired Ethix SRI Advisors, one of Europe’s leading ESG analytics and advisory firms with offices in Scandinavia. In January 2017, ISS also acquired IW Financial, one of the leading ESG analytics firms in the United States (based in Maine), and in June of 2017 acquired the climate investment data unit of Zurich-based South Pole Group.
ISS’s initial expansion beyond “G” to include Environmental and Social issues in the QualityScore, which will be announced on January 18, covers companies in six industries: Autos and Components; Capital Goods; Consumer Durables & Apparel; Energy; Materials; and, Transportation – roughly 1,500 companies in all.
A thorough exploration of ISS' new E and S QualityScores is available on the "G&A Institute To The Point! platform" including a conversation with Marija Kramer, Head of ISS' Responsible Investment Business. This important brief is available without subscription, with our compliments here.
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